Influence of Distribution Strategies on the Uptake of Micro-insurance Products in Kenya.

Abstract

This research focused on the influence of distribution strategies o Micro Insurance product uptake in Kenya. It is important to mention that for any good and services to succeed there the process has to be supported by a strong distribution strategy. This is because the production and sales cycle is not complete without strategic distribution channels failure to which the value chain will collapse and goods and services will not reach the intended consumers. This study focused on Micro insurance in Kenya mainly due to the fact that this product growth has remained low despite it being a critical sector for Kenyans to cushion themselves against eventualities and poverty reduction. The study assed and measured the influence of distribution on Micro Insurance uptake and made recommendations to Micro insurers on how they can improve their distribution strategies in order to reach out to the masses at minimal cost. The study was based on two theories including the theory of competitive advantage and the agency theory. Competitive theory because the Micro Insurance market in Kenya is low and is characterized by cut throat competition and for insurers to success they have to adopt strategies that give them a competitive advantage. The agency theory was considered due to the value chain in Micro Insurance product distribution and for it to succeed agency there is need for a proper management of the stakeholders. The population of the study was drawn from 38 financial institutions which offer Micro insurance products including Insurance companies, Microfinance institutions and commercial banks. In each organization one responded in charge of distribution was selected to participate and 30 questionnaires were successfully completed. Data collected was analyzed using simple percentages and regression analysis and presented using charts and tables. The finding of the research there was a positive relationship between distribution strategies adopted and product uptake. Some of the key considerations Micro Insurers should make while selecting a distribution strategy included nature of products and customer characteristics. The research recommends that Micro insurers should make critical considerations while selecting distribution strategy as this will in the long run determine the survival of the organization